PRIME BROKER OVERVIEW

THE ICE LINK SOLUTION

ICE Link fills the missing piece in the credit derivative processing
jigsaw. ICE Link provides an easily adoptable post-trade affirmation ICE LINK: THE MISSING PIECE OF THE JIGSAW
and messaging service. This allows dealers to affirm trades with their
counterparties prior to processing. The addition of this affirmation
layer ensures that all the key economic details of the trade including
allocations, reference entity, payment dates etc. are agreed to between
both counterparties immediately after execution.

ICE Link’s easy adoptability means that no change is required to

the dealer’s existing process or infrastructure. Instead, the ICE Link
platform augments performance and consequently improves the return
on investment by ensuring that the trade data which passes through
them is 100% accurate and timely.

ICE Link is agnostic (fully open and complimentary) and is currently

working with numerous vendors and market utilities to deliver tangible
benefits to both dealers and buy-side clients.

ICE LINK PRIME BROKERAGE SERVICE - DEFINING THE MARKET STANDARD

The operational challenges associated with ICE Link currently supports the following
credit derivative trading are amplified with instruments and Transaction types: ICE LINK PRIME BROKERAGE BENEFITS

the added complexity of Prime Brokerage REDUCE OPERATIONAL RISK

give-up. ICE Link delivers solid and robust TRANSACTION TYPES • Delivers legal Execution via DTCC on trade
workflow and messaging that mitigates New Trades date
• ISDA novation protocol compliant
the operational burden associated with the Allocations • Reduced outstanding trade confirms, cash
introduction of a new party to each trade. ICE Novations breaks and margin problems
Link also delivers a crucial layer of visibility Terminations
IMPROVE CUSTOMER SERVICE
and process notification to Prime Brokers and Prime Brokerage Give Up • Execute at DTCC on Trade Date
their clients. • Trade linkage and process notification
INSTRUMENTS
IMPROVE MIDDLE/BACK OFFICE PROCESSES
ICE Link has worked closely with the Prime Single Names CDS AND EFFICIENCY
Brokerage community to establish a market Indices • Real time trade notification and monitoring
• Improve DTCC match rates to 100%
standard workflow. This is encapsulated in Tranches
the workflow of the ICE Link platform which REDUCE TRANSACTION COSTS AND
delivers the operational efficiency that makes IMPROVE MARGINS
• Delivers costs efficiency across middle/back
Prime Brokerage an extremely attractive
office
proposition to investment managers engaged • Improve scalability of existing investment
in credit derivative trading.

THE ICE LINK PB GIVE-UP PROCESS

ICE Link completely automates the process whereby a trade is ‘given-up’ to a Prime Broker who acts as an intermediary between a dealer and an
Investment Advisor. The process works as follows:

NEW TRADE GIVE-UP

TRADE ENTRY BY DEALER
NEW TRADE, NO ALLOCATIONS • The dealer enters all trade details and
indicates the Prime Broker to whom the
trade is being given-up immediately
after it has been verbally agreed with the
Investment Advisor
• Once the trade has been entered in to
ICE Link, it is sent to the Investment
Advisor
ALLOCATIONS AND AFFIRMATION BY
INVESTMENT ADVISOR
NEW TRADE, WITH ALLOCATIONS
• The Investment Advisor is able to affirm the
economic details of the trade and ‘give-up’
the trade to its Prime Broker in one simple
step
• If the trade is being allocated across multiple
funds, the allocation strategy is specified
up front by the Investment Advisor at the
point of trade affirmation

AFFIRMATION BY PRIME BROKER

• Once the Investment Advisor has affirmed the trade, the Prime Broker is notified and the clock starts running for that trade. The clock indicates
the amount of time the Prime Broker has to affirm or reject the give-up and is configurative for each give-up relationship
• The Prime Broker must positively acknowledge acceptance of the trade

NOVATION WORKFLOW
Once a trade has been given up to a Prime Broker on ICE Link, a link is maintained between the original Dealer (Dealer 1) and the Prime
Broker trade and the corresponding Prime Broker and Investment Advisor trade(s). If the original trade was allocated across multiple
funds, all trades between the Prime Broker and Investment Advisor are linked to a single trade between Dealer 1 and the Prime Broker.

Two different novation process examples are described below. In each cases, the novation is initiated by the Investment Advisor and
begins after the Investment Advisor (the ‘transferor’) agrees to the novation off-line with a dealer counterparty (the ‘transferee’).

PRE-NOVATION PRE-PARTIAL NOVATION WITH ALLOCATIONS

POST-NOVATION POST-PARTIAL NOVATION WITH ALLOCATIONS

FULL NOVATION OF SINGLE ALLOCATION TRADE PARTIAL NOVATION OF ALLOCATED TRADE

The novation process works as follows for trades not allocated across multiple
funds:
• The Investment Advisor pulls up the trade in ICE Link. Note that this trade
is between the Investment Advisor and its Prime Broker
• The Investment Advisor then selects to novate the trade and enters the
novation details: transferee, novation date, payment amount, payment
direction
• Once the Investment Advisor clicks send, notification of the novation
is immediately sent to the Prime Broker, the remaining party, and the
transferee
• All three parties must affirm the novation in order for the novation to be
processed
• Once all three parties have affirmed, ICE Link terminates the trade between
the Prime Broker and the Investment Advisor and assigns the trade between
the Prime Broker and the remaining party to the transferee (Dealer 2)
* ICE Link also supports novations where the Prime Broker ‘stays-in’ in the
trade between the two executing dealers
The novation process works as follows for trades allocated across multiple
funds where the Investment Advisor wishes to novate some but not all of the
trades in the block:
• The Investment Advisor pulls up any one of the PB - Fund trades in ICE
Link
• The Investment Advisor then selects to novate the trade
• The Investment Advisor selects the trades in the block to novate as well as
the novation details: transferee, novation date, payment amount, payment
direction
• Once the Investment Advisor clicks send, notification of the novation
is immediately sent to the Prime Broker, the remaining party, and the
transferee
• All three parties must affirm the novation in order for the novation to be
processed
• Once all three parties have affirmed, ICE Link terminates the selected
trades in that block between the Prime Broker and the Investment Advisor
and partially assigns the block trade between the Prime Broker and the
remaining party to the transferee (Dealer 2)

For more information, please contact:

London +44 (0)20 7429 4500 | New York +1 212 323 6000 www.theice.com

© 2009 ICE, Inc. All rights reserved. This document and the information contained herein are for information purposes only and remain confidential and proprietary to ICE, Inc. and its affiliates. All information is provided “as is” with
all faults and with no warranties of any kind. Any unauthorized reproduction, distribution or use is strictly prohibited. This information is intended to be used by investors who are either eligible counterparties or professional clients
only and not retail participants. Accordingly, services and products mentioned or referred to in this document are not available to retail clients.